Officials sound off at ITC antidumping hearing

WASHINGTON—The U.S. tire industry is either besieged by underpriced passenger and light truck tire imports from China, or doing better than ever.

Those were the contradictory scenarios presented by advocates and opponents of antidumping and countervailing duties against Chinese tires during a hearing June 9 before the International Trade Commission.

The ITC, which has already made a preliminary finding of material injury against the U.S. tire industry caused by Chinese imports, held the hearing as a final public information-gathering event before its final ruling in July.

The Commerce Department's International Trade Administration, which has made preliminary determinations setting antidumping and countervailing duties against Chinese passenger and light truck tire makers, is scheduled to make its final determination on both duties June 12. A final affirmative ITC ruling of material injury would make the duties law for the next five years.

As set forth by the United Steelworkers union and its legal counsel, the domestic tire industry and its workers benefited greatly from three years of tariffs the federal government placed on Chinese tire imports under Section 421 of the Trade Act, only to see those gains crumble once the tariffs ended in September 2012.

Despite a growing tire market in 2012-14, the U.S. tire industry saw widespread declines in those years, according to Terence P. Stewart of the Washington law firm of Stewart & Stewart.

“The U.S. industry should have been able to participate in this growth,” Stewart said. Instead, the U.S. industry lost nearly 28.5 million tires sold, $968 million in operating income and $265 million in wages between 2011-14 because of Chinese imports.

In 2014 alone, 58 percent of Chinese tire shipments were exported, driven entirely by an increase in exports to the U.S., according to Stewart. China, he said, had tires ready to be shipped at 12:01 a.m. Sept. 27, 2012, the minute the Section 421 tariffs ended.

Stewart was accompanied by USW officials and local presidents, all of whom testified about the suffering caused by Chinese imports and the benefits of tariffs and duties.

The Michelin North America Inc. plant in Tuscaloosa, Ala., will not have its regular July shutdown this year because of the greater demand caused by application of preliminary duties by the Commerce Department, according to Mark Williams, president of USW Local 351L representing the Tuscaloosa workers.

“They are seeing the positive effects of duties on tire sales,” Williams said.

Williams was seconded by Rodney Nelson, president of USW Local 207L representing workers at the Cooper Tire & Rubber Co. facility in Findlay, Ohio.

“Anyone who says that relief from Chinese imports doesn't affect American workers hasn't been to Findlay,” Nelson said.

Several members of Congress also testified in favor of a finding of material injury, including Sens. Jeff Sessions (R-Ala.), Sherrod Brown (D-Ohio) and Tim Kaine (D-Va.), and Reps. Robert Aderholt (R-Ala.) and David Price (D-N.C.).

Rep. Price noted the ITC's pre-hearing report that showed tire imports from China increased 84 percent since 2012 and also that Chinese tire makers undersold U.S. producers in 100 percent of the commission's price comparisons.

“It's safe to say that this is nothing new, particularly in regard to the trade-distorting practices historically employed by the Chinese government,” he said.

However, Chinese tire makers and importers, along with their legal counsel, said it was absurd to say the U.S. tire industry is suffering at all.

“The pre-hearing report shows that not only the industry's profitability been increasing throughout the commission's period of investigation, but each member of the domestic industry earned a profit in all three years,” said Jonathan T. Stoel, attorney with the law firm of Hogan Lovells U.S. L.L.P.

Five existing U.S. tire makers and three new entrants into the U.S. industry are investing more than $3.3 billion in U.S. manufacturing, according to Stoel.

These investments will increase the U.S. industry's capacity by 42 million tires, or 25 percent of current capacity, and create more than 6,700 U.S. jobs, he said.

Dennis Mangola, senior consultant to Moorpark, Calif.-based tire importer ITG Voma Corp., backed Stoel's assertions.

During the period of investigation, the domestic tire industry's capacity utilization was 91 percent, which is as close to full capacity as most industries ever get, Mangola said.

There are four separate tiers in the tire market, and the Chinese don't compete with the U.S. in the higher two tiers of that market, according to Mangola.

“No U.S. tire manufacturer has any desire or interest in making Tier 4 tires,” he said.

The Chinese tire industry is about seven years behind the U.S. industry technologically and cannot compete in the higher tiers, according to Gustavo Lima, CEO of Miami-based Oriente Triangle Latin America Inc.

“That doesn't mean their tires aren't safe or well-made,” Lima said. “It just means that a guy who drives a Corvette or Mercedes isn't going to put Chinese tires on his car.”

However, the USW and its counsel questioned the entire idea of tiers in the U.S. tire market. Even if tiers exist, they said, U.S. producers haven't abandoned the lower-price market, while dealers regularly promote Chinese tires as competitive with high-quality domestic tires.

“Our opponents are saying that anything from China is in Tier 4, so you don't have to worry about it,” said Elizabeth J. Drake of Stewart & Stewart. “That's a self-serving definition.”